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CME: US Pork Exports Show Improvement

US - With meat supplies expanding for all proteins exports take an increasingly important role.

USDA has done a lot of work to improve the reporting on weekly beef and pork numbers but one needs to remember that the report only covers shipments of muscle cuts.

These are not precise numbers that can be totalled up and give us the month export volumes. What they do provide, however, is some directional indication. The weekly export numbers released this morning were generally supportive for both beef and pork. Below is a brief recap for each species.

Beef: Exports of fresh/frozen beef muscle cuts for week ending September 22 were 14,019 MT compared to around 11,000 MT for the comparable week a year ago. Weekly exports have been tracking well above last year for much of the summer and they promise to follow that trend into the fall.

Because of the variability of week to week shipments, we prefer to look at a four week moving average. So for the last four weeks’ beef exports have averaged at 13,321 MT, 2,981 MT (+29 per cent) compared to the same four-week period a year ago.

Export gains have been broad based, with strong gains both in Asian markets but also to partners in North America. Shipments to Japan during the last four reported weeks have averaged 3,697 MT, 33 per cent larger than a year ago while exports to South Korea have averaged 3,070 MT, 55 per cent higher than a year ago.

Our expectation earlier in the summer was that exports to Asia would show notable improvement because of both lower US beef prices (vs. previous year) but also lack of supply availability in Australia, our main competitor in these markets. So far that expectation has been proven right.

Exports to Mexico and Canada also remain robust, showing +15 per cent and +19 per cent improvement, respectively. Overall, the latest export numbers paint a positive picture for export demand.

Pork: Export shipments showed some improvement from the disappointing numbers that were reported last week. Total weekly exports were 19,055 MT, about 1,600 MT larger than the previous week and the largest weekly export volume in three weeks.

It is too early to get excited and project a ramp up in pork exports but the latest data does provide some hope that the trajectory is about to shift.

Based on the weekly export numbers for August and so far in September we still expect exports for these two months to show a notable improvement compared to a year ago.

The chart shows the official USDA statistics for exports of fresh/frozen pork. At this point we are pegging August fresh pork exports up 15 per cent from last year and September exports up about 6 per cent from last year. Pork exports increase in Q4 due to the overall increase in slaughter and pork availability.

At this point the expectation is for pork exports to show robust growth in Q4, helped in part by the sharp correction in pork prices. Some items have become particularly attractive for foreign buyers.

USDA quoted the price of bone‐in hams last night at around 52 cents, down from +80 cents in August. We think at these levels Mexico will be a very aggressive buyer of US hams.

China shipments also rebounded in this latest report and at 1379 MT it was the largest weekly shipment number in four weeks. It will be interesting to see how Chinese buyers react to the correction in US pork prices especially as it comes at a time when European pork prices are going in the opposite direction.